How does a car dealer make when he sellls at invoice?

Car dealerships generally do not sell cars at invoice price unless there are special circumstances or incentives involved. While invoice price represents the cost the dealership pays to the manufacturer for the vehicle, it is not the price at which the dealership sells the car. Dealerships typically add a markup to the invoice price to cover various expenses and generate profit. This markup includes costs such as transportation, advertising, sales commissions, dealership overhead, and any additional services or add-ons.

In most cases, dealerships aim to sell cars at or above the manufacturer's suggested retail price (MSRP), which is higher than the invoice price. The MSRP serves as a starting point for negotiations, and dealerships may offer discounts or incentives to attract customers and make a sale.

However, there might be instances where a dealership chooses to sell a car at invoice price or even below it. These situations may arise during special sales events, clearance sales, end-of-year inventory reductions, or when a dealership is trying to move a slow-selling or older model vehicle. Selling at invoice price or at a loss on specific cars can help dealerships clear inventory, generate foot traffic, and attract potential buyers who may consider additional sales or services from the dealership.

Nevertheless, it is essential to note that invoice pricing alone does not guarantee a profit for dealerships. They must factor in all the expenses associated with running a dealership and ensure they are recouping their costs while also allowing for a reasonable margin of profit.